Shell's level of drilling activity unlikely to increase in Northwest Colorado in 2013

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Oil & gas issues in Routt County

— Shell Oil Exploration Project Manager Matt Holman told the Routt County Board of Commissioners on Tuesday that his company is at least three to five years away from making a decision about going forward with full oil-field development here.

However, Shell doesn’t think it’s too early to begin studying the impacts that different levels of energy development could have on social and economic institutions in Northwest Colorado and will begin a study this spring.

Holman met with the commissioners for about 75 minutes Tuesday to share what he knows about his company’s plans for the coming year under a new cooperative arrangement with another energy exploration company, Quicksilver Resources.

“We don’t have a firm plan for the year; it has to be jointly agreed upon,” Holman said. “But we anticipate similar activity to last year. We drilled three wells, and Quicksilver had two. We’ll be about the same this year.”

The two companies closed on a deal in late 2012 calling for them to share equally the revenues from mineral rights leases and wells within most of an 850,000-acre “area of mutual interest.”

Shell will conduct oil well drilling and operation within that area going forward, with the exception of a few areas where Quicksilver already has drilled wells, including Wolf Mountain northeast of Hayden.

Holman introduced the commissioners to Garrett Dolan, a social performance adviser for Shell.

Dolan said he was preparing to begin a socioeconomic impact analysis that would study potential effects on Routt and Moffat counties looking five years out and 10 years out. He expects the study to take six to eight months, and he will look at the combined infrastructure of both counties as well as considering them singly.

“We want to look at, 'What will our impacts be on the communities?' And if you flip it over, the community should ask, ‘What does this mean for us?’ And consider, ‘What steps should we take?'” Dolan said. “We want to reveal what will be good and what will be challenging and go through the process together.”

To reach that end, Dolan said, he would look at a variety of scenarios and how they would play out given existing infrastructure in the area.

Shell spokeswoman Carolyn Tucker drew on a case study from nearby Garfield County. Advance planning for the natural gas field there revealed well in advance that existing wastewater treatment facilities would not be adequate to meet demand and the communities were behind the curve in that regard even before development began in earnest.

Holman said he is continuing to define and understand the ability of the Sand Wash Niobrara Field and its potential to provide repeatable results that would translate into two of every three wells producing enough oil to make full-field development economically feasible. He said his sense is to continue to proceed gradually and learn from each successive well.

To reach Tom Ross, call 970-871-4205 or email tross@SteamboatToday.com

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